Altair Engineering Inc (ALTR)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | 6.61 |
| Days of sales outstanding (DSO) | days | 124.29 | 117.60 | 103.34 | 99.24 | 89.28 |
| Number of days of payables | days | 8.21 | 9.44 | 6.42 | 9.31 | 23.63 |
| Cash conversion cycle | days | 116.08 | 108.16 | 96.92 | 89.93 | 72.25 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 124.29 – 8.21
= 116.08
Altair Engineering Inc's cash conversion cycle has been increasing over the past five years, which indicates a lengthening time between the company's cash outflows and inflows.
The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle can indicate inefficiencies in the company's operations or difficulties in managing its working capital effectively.
Altair Engineering Inc's cash conversion cycle has increased from 72.25 days in 2019 to 116.08 days in 2023. This trend suggests that the company may be facing challenges in managing its inventory, accounts receivable, and accounts payable efficiently.
Overall, a longer cash conversion cycle can negatively impact the company's liquidity and cash flow position, as longer turnaround times in converting investments into cash may lead to working capital shortages or increased borrowing costs. Altair Engineering Inc may need to review its operating processes and working capital management strategies to improve its cash conversion cycle and overall financial performance.
Peer comparison
Dec 31, 2023